In our latest podcast our team discusses what could be Italy's most successful export - governo tecnico, or government by bureaucrats. It's happened in the Netherlands, and may soon be happening in France.
The Eurointelligence Podcast
Governo Tecnico, coming to a place near you
Welcome to the Euro Intelligence Podcast. I'm Wolfgang Muncho and with me, as it's done in Wanchank and Jack Smith. Today, we want to talk about one of Italy's most successful exports. It's not a drink, it's not a car, it's a guevano technical, the technical government, which seems to be a very popular form of government and not only in Italy these days, but elsewhere in Europe as well. Zane, you wrote this morning about the left lines in France having agreed on a candidate for the job of Prime Minister. A technocrat, what's behind that? Yes, so last minute, really, the four parties of the left lines, the France ACMEs, Socialists, the Communists and the Greens, but they're galores. These four parties could not agree for 16 days, they've been discussing, but Lucy Kastetz, she was emerging slowly in these conversations, and it turned out that she was the only one all the parties could agree on, and the reason was that she didn't have political history, she doesn't have any party affiliation, so she didn't fall in any of the traps, you couldn't be too close to the one party or the other. She also was a staunch supporter of something that is very crucial to the programme, the repeal of the pension for reform, that Emmanuel Macron's government under Elizabeth Boon was pushing through. Now, a technocrat, she has a good reputation in terms of where she came from, good education, as Young's poor London School of Economics and ENAR, so all these kind of potential she has, digs the boxes, she's now the Paris city hall responsible for the budget, and the left claims that they have a claim on the Prime Minister's job. This is disputed by Emmanuel Macron, who's clearly said yesterday, it's really not about the name, but about whether or not you have a majority in parliament, and by the looks of it, you don't. But nobody does. Yeah, nobody does, that's what he's saying, and that's why. So the next meeting about government information will be made August after the Olympic Games. All sides have now, amongst time, basically to work on whether or not they can deliver what is considered a solid majority in the assembly behind the candidate, but at least they start with the candidate, and it's a technocratic that ticks the boxes from a technocrat, also that is not dangerous in terms of having ambitions of becoming a presidential candidate, but it is a tricky one. I mean, we know from all technical governments, and it's not a guarantee for success. Mario Da'ai was a successful candidate, but Mario Monty wasn't. Even if they were to get a majority in parliament, she's 37 years old, quite young and experienced on the national level, untested, so will she be with the bond really up to the challenge, or will she be just a vessel that the left uses in order to push through that program? The overriding experience of technical government in Italy was that they lasted until they didn't, and that was often very short. Monty's was a bit over a year, Draghi was longer, but it also ended, and previous experiences with Damato were relatively a chumpy, relatively short-lived. So the general idea of technical government is sort of something that may be misunderstood. Jack, you wrote about the Netherlands. They also appointed someone we don't know. I'm always wondering whether we should remember these names, because they might just go after six months, and then we were stuck with their names in our heads. There's so many. It's the new prime minister of the Netherlands whose name I really don't know. He's a technocrat. Is he going to be a prime minister still in a year's time? Yeah, that's an excellent question. How would I say it? Given the state of Dutch politics over the last several years, I wouldn't bet my house on it. At the same time, you could have said that about Mark Rotter when he came in as prime minister, and he stayed in there for quite a while, I think simply because nobody else could really find any alternative to Rotter in their coalition configuration. So the Dutch prime minister at the moment is a guy called Dick Schuf. He's a career bureaucrat. He used to be basically kind of the head of the Dutch. Effectively, they're head of their intelligence agency. One of the ironies of this in numerous people have kind of remarked on this is that here at Wilder spent a lot of his career railing against what he called the Dutch deep state, and now he is in a government which has a prime minister who is the most deep state person you could possibly think of. So that's just how it ends up sometimes. But the origins of this particular government that Dick Schuf is heading lies in the fact that the PBV, so here at Wilder's party, came first in November's general elections. But they and the BBB, which are kind of a pro-farmer populist party, the two of them together did not have enough seats in the parliament to govern on their own. So they needed support from two center right parties, the VBD, which is Mark Rotter's party, and the NSC, which is a party that was basically set up by this guy called Peter Olmzig to defected from another center right party called the CDA. Now I'd recommend having the Wikipedia page for the Dutch parliament open while you listen to this so that you can keep track of all the different political parties for those listening at home. The situation was basically that neither the NSC nor the VBD really wanted to be in a coalition government with the PBV, and especially not one with Wilder's in it as prime minister. The result of that was an impasse in negotiations, and eventually they solved that by saying, okay, none of the party leaders are going to be ministers in the government, and instead we're going to appoint some sort of third party figure with a blend of ministers from the four different parties, plus some ministers from outside of the political party system. That's eventually where you got to, which is how we got Dick Shoeff. Part of the consideration was Wilder's and some of his policies. I just think another one was a relative lack of personnel from the PBV, so the party's simply not having enough well qualified and competent people that they could put forward for government, which was another issue. Something else I'd say about the Netherlands is I think its experience is a little bit different from France, and in a way what's gone on in the Netherlands is a little bit closer to the classic Governor Technico model, because what preceded the whole Governor Technico process in Italy was a series of increasingly unwieldy multi-party coalition. So almost the direct precursor to, you know, Juliano Amato's first premiership in the early 1990s was the Penta Partita, this very large and unstable coalition of centred ground political parties that was designed to keep two other political parties out of government. One of those political parties was the Italian Communist Party, and the other political party was the neo-fascist Italian social movement. It was that kind of coalition forming dominating Italian politics and then eventually collapsing, which paved the way for Amato's first premiership, and then later on for the almost complete collapse of the Italian political system and the advent of Berlusconi later on. That experience is a little bit closer to what's gone on in the Netherlands than it is to what's gone on in France. So in the Netherlands, this government, the last elections, and eventually this government have kind of come out of a series of multi-party coalitions which were at a headed reaching its breaking point. Really there was a point where the differences between the last four party coalition, which was again a kind of centrist coalition, became so irreconcilable that eventually it collapsed, in this case over asylum policy, and you had this new kind of government and eventually the solution's been technical government. It seems though France ends up doing this, is if France will just basically skip over that stage, and they'll skip over that stage largely because the party socialist, the central left party, which would be necessary to that middle stage of increasingly unwieldy governments, just doesn't want to be involved. We have these two driving forces to come up with a sort of majority. One is from the left alliance where the socialist party was one of the driving. I mean, head of the socialist party, Olive, he was one of the driving forces behind the alliance. Now that they have a prime minister's candidate, they kind of consider it was yesterday that they put this deadline in saying this is the deadline. If we cannot find a candidate, we might actually have to reconsider our options, but now they have a candidate. So this is for now a means that you're going to stay in the left alliance. On the other hand, it actually ruins a Gabriel Lautau's chances, because Gabriel Lautau was counting on building a sort of grand coalition type alliance from the conservatives, the former little people, which is now caused at La Vuat, that can become a new name every time they come up with new names. I was going to say the talents of French Gollis has been coming up with new names. I don't know how many different times that party, which is essentially the same party, has changed its name over the day. I looked at Wikipedia and the entries where they explained the different names that they had over the last decades. It's like a really long, it's like half a page long. Yeah, it is still essentially the same political party. We should just call them the Gollis. A lot of the time, yeah, it's easier than going through all the different names and explaining it. Yeah, let's stay with the Gollis. I think that's a good way to describe them. So they don't want to participate in the government, but they're ready to support a government from the center together with the socialist. But of course, neither the far right nor the far left. And I think that's a position that is definitely very central to our talent, but it's not something that Emmanuel Macron necessarily completely endorses. I think from the comments he made yesterday in the interview where he said, the idea that 11 million voters who voted for the Assembler Mona said, no, the far right, that that party didn't get any representation in terms of positions in the assembly when they voted for it last week is troubling. I would agree with that description, but what does it mean? I had to say that a retroactively means a little bit like he's heading, does he hedge his badges for the next government? I mean, he's the one who has the prerogative. It's also very different from the Dutch scenario. So here we have the president who actually can nominate the prime minister. And therefore he has the degree of freedom like there is no other institution in the Dutch system that could decide on these issues. But here in France, you have a very powerful president where the constitution does not have any limits in terms of times or in any condition who he has to nominate. So I think he will take his time as he did with all the other prime ministers. I mean, he was not really known for being fast in deciding on his prime ministers, be it acoustics or on Elizabeth Bourne. He always took his time or not. So I don't think this time will be any different. Of course, the left already criticized that it's saying, now we have a candidate, you need to proceed and you need to respect the vote that we won the elections and the far right, if I find it cynical, that he even mentions their failure to not have gotten any positions in the assembly. I think this will go on for a while. I don't think that anything will happen during the Olympic Games for security reasons. Does he have another idea of a technical government? Yeah, part of the explanation, though, for what Macron is doing by saying this about the positions within the assembly might just be shifting blame, which is to say that these positions in the assembly are decided as a prerogative of the legislature. That's really their responsibility. Of course, it's not Macron's responsibility. Macron's responsibility is nominating a prime minister who will head a government entire thing. So it's a way for him to say, okay, well, you guys aren't really doing what the voters expect of you, while maybe quietly shuffling off his responsibility to do what he thinks the voters expected him. That's one way of looking at it. The other thing is that he now uses the far right basically to dispel the left's claim onto power. So he's doing the classic to be dead and to improvise. So no one really gets there the full shot. And therefore, the one who's incumbent has the best chances of persevering. We have seen the centrists have punched above their weight in the assembly in terms of positions that they got in the assembly, and they still have the care and take a government. In one aspect, it looks like nothing has changed, although the average metrics in the assembly has changed radically. That's the thing you have about 20 years ago. It was only Italy that had technical governments. And today we have obviously big differences between France, the Netherlands, Italy, and other countries. Absolutely. But it's becoming a more common theme, or the step-uncle of the technical government, which is the grand coalition, where everybody's in government is a kind of a technical government, where nobody wins. Everybody gets a small share of government, where the only opposition are people who are on the far right, who are on the far left. It seems to be a place where Germany is heading towards, where the Netherlands has been in, therefore, a long time. That was a permanent centrist coalition, and the Netherlands have been. Gevils was the only sort of real position party, and we're seeing this in France now, where the only real position is the RN. Everybody else is sort of scrambling for some position in the government. It's sort of a sign of our, and we see this in the European Parliament, where everybody who's brought European is now supporting Frontline, and everybody who is anti-European, or Euro skeptic to some degree, is not. And so this is an interesting development, because it's a price, people of choices. We cannot be a pro-European and anti-frontal line. This is impossible, because there isn't a political space. You have to be either on that site, or you have to be on the other side. And I'm always worried about what voters might ultimately conclude. They might have made different choices if a different choice was available to them. But in the end, one would expect them to support an opposition party at some point. And if they're the only opposition parties that are out there, then that will eventually be the winner of an important election in Europe. And I think the technical government gets people into this direction. I mean, we saw a mini version of that, when after years of technocratic grand coalition-type administrations, Italy had that populist episode with the Liga and the Five Star. But in the end, after Draghi, they voted for one of the right. Maloney isn't what people fear, she might be. It's too early to tell about her. We will see where she will be in three years' time. But the more important point is that technocratic governments might lead to a backlash. That the best thing that could happen to the RN in France, in Mexico is a question, is a technocratic government of the left. Yeah, I'd say a couple of things about this. One of them is that in certain countries, their political structures just lend themselves a little bit more to the style of government than others. For instance, in the Netherlands, to pass ordinary legislation, you need a majority from both the Dutch House of Representatives and the Dutch Senate. The Dutch Senate is elected differently. Rather than being elected directly, it's indirectly elected by the provinces, by local governments in the Netherlands. What happens is you have provincial elections, and then those representatives decide on senators. Those elections are often out of sync with each other. The majority that you find in the Dutch Senate is often quite different from the majority that you find in the House of Representatives. That's just a fact of the Dutch political system, and it has been for a very long time. It is the stage where even if you can hypothetically command a cabinet, which can hypothetically command a majority in the lower house, you will have a lot of difficulty passing legislation unless you can find workable majorities with parties that are nominally in the opposition in the Dutch Senate. That's one driving force towards these larger coalition governments or multi-party coalitions that straddle the political center and either political side of the spectrum in the Netherlands, just that you will often need support from one or both sides of the aisle in the Senate to actually get your legislation forward. Similarly, in Italy, of course, you have perfect bicameralism. The Chamber of Deputies and the Italian Senate have equal legislative weight. Again, there are differences between how these two bodies are elected in Italy. Back in the day, the pre-1990s, when you had proportional representation as the electoral system in Italy, you would oftentimes have a situation where to command a majority, which you needed to actually form a government in the first place in both houses of parliament, you would need these very large coalition. That's part of it. The other thing is that the funny thing is when you pull people about this and when you ask them about what their ideal form of government is, they often say two kind of contradictory thing. One of them is that they want government to do things and to get things done. But another is that this relatively non-partisan style of government actually seems to be quite popular. You can also see that when you give voters the opportunity to do split ticket voting, as is the case in some political systems, like in Italy or the United States. Again, it often proves to be relatively popular and relatively common for people to vote with split tickets. Again, if you turn back several countries where this is a possibility, they do say that they want politicians to work more, quote, unquote, across the aisle. So you have this, I think, tension between these kind of apolitical or grand coalitions or technocratic governments being quite unwieldy because they lack a certain amount of political direction and finding it very difficult to get things done versus the fact that a lot of the time voters actually seem to like the idea of a non-political government. I was wondering whether this is not the result of the extreme polarization between the far right and the far left groups that are coming up in all of our European countries. We have in Germany, we have the Tsarwar and Knicht and the AFD to the left and to the right. Coming up, we have in France there are some l'emannas in the far right and la français means on the left. It's this idea of because they have very strong positions. It's an uncompromising position. So Jean-Luc Manocher said, "Either you take the whole programme, but nothing but the programme or not, but I'm not going to compromise." So usual down by Bella from the far right has been much more pragmatic, but Marine Le Pen, maybe not so if you were to campaign on the presidential election. So I think being stuck in the middle is sort of the place. If you have such a polarization, having experts in the middle is seems to be the only way forward because it's like with the cancel culture, right? We live in this culture where cancel culture is something that people do that they find offensive, they just cancel each other without. And if you have this kind of, you're either with us or against us logic in the positioning, that is really not what politicians normally used to do because it's all about compromising. And if that's not a part of their political culture, then the only way forward is really to end up in the technocrat that has no history, no political past that they could use against them or to oppose to and therefore being the only conduit for these extreme parties to be upon. The observation I think that electrodes like these fragmented centrist coalitions, I think depends very much on the country's, I mean the electoral system is surely a factor, but it depends very much on the country's growth position. And I think it's pretty much a snapshot or a look at what happened in the past, indeed that was the case. I think there's a shift going on. And the shift that's going on is that in countries like most of our countries that don't deliver economic growth as much as they did in the past, it will become much more difficult for these centrist coalitions to govern because it'll be much harder to get anything done. And this is a sign where they need to get something done. When your economy is ticking over nicely, in the US it doesn't really matter who's going to be present, the economy, US economy is strong, and most of us Americans will be refined at the end of whatever the next term, whoever the next president will be, that's going to be very different in Europe. When in Germany you'll see this. They're not happy. The Great Green Coalition was supposed to be that sort of everybody in government and they're very, very unhappy and you will see this. The next one will be CDU Green or some probably three parties. I think they will have the same problem. More and more people will drift to the far left and the far right because they are unhappy with this. And this is what we saw in Italy. We saw the fragmentation of the political spectrum because Italy's been there before. Italy's had low growth for 10, 20 years, near Italian electorate. If you look at the parties that are genuine, centrist, pro-European, they're not a minority now. That's the Lego, there's Maloney's party, we should not count it at the center, right? That would be a little bit premature. There is a five-star, even the PD is now turning to the left away from its institutional European positions that have held on the past. And so the fragmentation of the political spectrum is very much related to the economic performance as people become more wary of the circumstance. I think that I would disagree with you. Whilst the economic performance is certainly a context in which it's all happening, I think what we see what is similar compared to the US is the identity that identity is actually Trump, economic conditioning. This is why it is becoming so polar because there are identifications on the right and on the left with certain values. But no one actually thinks about the economic crisis and that it is attached to actually achieving those values. So for the right, we have migration. It's all about who we are, who are we? I remember when I lived in France, it was already kind of we had so many debates about queso newe on a national level and this whole identity about the nation and what it should be like. This is the realm of ideas and that realm is quite active at the moment and it has very different tastes and to the right is it turns anti-migration, it's more has a nostalgic flair to the old French on the 1940s or 1950s when the times were all good. And then you have on the left a much more redistributional idea of all the society should be like. So equality, one of the French principles is put above everyone else. So very different ideas of the identity and they Trump, the economic concepts that behind in such a way that people are already in the US, we have the same. I mean Democrats, Joe Biden doesn't yet get any credit for the performance. He created, everyone sees the inflation but not necessarily the jobs that were created, all these new companies that came up and on the supply side. But the identity of what it means to be a Democrat or what it means to be on the Republicans, Republicans saying we are the only pro-Israel party, all these kind of things were like, why should that be a tag you're using in order to describe who you are? It's no longer the Clinton, it's Logan, it's the economy stupid. I think it's no longer valid neither in the US, but also neither in the EU at the moment. I think as well, there's a question between people being discontented about the economic picture and actually wanting to do anything to improve that that will potentially disrupt their lives. Again, I think the Netherlands is a case in point. The Netherlands is a very gas-dependent country in terms of its energy mix. It was hit very badly by the energy crisis and obviously a lot of people were unhappy about that. But then, okay, what are the alternatives and what are you happy with? There's been opposition to drilling for more domestic gas and cloning in, because drilling in the gas field can cause low-level earthquakes. At the same time, you have opposition at the local level to more renewable energy permitting, plus you'll have opposition to measures to encourage people to install heat pumps to basically get domestic heating off of gas usage. Then you look at other areas where there's an increasing anti-immigration sentiment, but then with some of the kind of Netherlands, most advanced industries like semiconductor equipment production do require skilled immigrants. Then you have the tension between environmental protection and more house building or land use for this or that. You get the impression that there's a general sense in which people want things to change, but somebody else has to bear the brunt of that change and not them. That's ultimately up to politicians to try and resolve. It's just the question of when you have the courage to stick your head above the parapet and say, "These are the kinds of decisions that we need to make to resolve this," and when you have the kind of, I guess, the candor to actually say that. I think that's exactly the point. I think we don't have the leadership that is adequate for this kind of time and challenge that politics have to deliver at the moment. It's easy to talk about about certain values, but if you haven't figured out how to deliver it, that is where normally it gets stuck, the political process, and that's where they get moved out of office. To have a technocrat in charge might the hope that somehow they know better how to overcome those obstacles and how to solve those conflicts and dilemmas, but clearly these are dilemmas and that are of time is facing not only because of the geopolitical situation, but also because of climate change and many fundamental, also the structural decisions that will determine how our economies will function moving forward. Yeah, it's also, I think, expressing the need to accept a bit of short-term disruption for long-term benefits. It's a classic kind of time consistency problem because if we think about, say, slowing economic growth, demographic decline, end climate change, these are all basically kind of like slow tire punctures. They're very difficult to notice year on year, but when you stack them up over the decades, they do start to have a prominent effect, and you kind of say, "Well, really, these things in the long-term, if you do not deal with them adequately, they do present threats to your way of life. They present threats to your kind of standard of living, to the social systems that you rely on, to the environment around you, and it's something that you have to do something about sooner or later if you don't want these things to change." But it's very difficult to notice year on year. Again, I think that's about having the ability and to a certain extent, the candor to communicate that. If you look back at the failures and achievements of technical governments in Italy, if you look back at a motto that you were talking about, a motto's government, the big success he did, he did banking reform. This is one of the things that he says that was the big thing that he achieved because it was so difficult. At the time, Italy was the first country in the '90s to actually get its banks to a reasonable degree of coming from where they are. There are still issues with the time banks, but they were, at least, large parts of the banking systems are now in a much better state because of that. The big achievement of the multi-administration, we've been massive critics of what multi-data and austerity and all this. But the big achievement was the pension reform. The Fonera law, we know a lot of people who've been involved in these reforms, and this was an intelligent reform. The technical rights seemed to be good at these long-term sustainability issues. These were both issues of sustainability. They needed to happen. However, they also introduced their own prejudices and their own academic prejudices and their academic fashions. austerity was very much in fashion in Europe. In the 1990s, Monty was not very distant from this. He took the view that if he didn't do this, there would be financial crisis. I don't think that was a logic to it on the contrary. I think the austerity destroyed quite a bit of Italy's gross potential. I think financial markets would have seen through this had to suit a different, more consistent policy. The Draghi administration was massively inflationary for Italy and part of our modern inflationary mindset. Let's have massive stimulus, there's a massive economic monetary stimulus, and we'll be paying the price for this. If you look at surveys, voters are not consistent. That is indeed the case. But the one consistent message we get, that they all hate inflation. They may also hate the policies to fight inflation, for sure. Yeah, I was about to say, the counterfactual is a world where those policies were implemented, and we don't know if people would have hated those even more. Absolutely. I would have been other shocks and there would have been political divisions arising from this. But inflation creates real-world, long-term consequences. It has a massive impact of the inter-distribution of income. It's particularly damaging for the young people. This is very different from previous generations, where the young people care less about inflation and unemployment were basically in almost entirely flat. We had a very different scenario in the past. These policies that were largely created by technocrats, technocrats in central banks and finance ministries, people who felt that central banks should be much more active in support of fiscal policy and that fiscal policy should use what they thought was its rule for maneuver much more aggressively than people did 10 of 20 years ago. That was a political, as an academic fashion, that came a standard view of the macroeconomic fraternity. There is a cost to be paid for this and it's not value-free. This was not a value-free technical. No, no, it isn't. And I think it's been made more difficult. If we think about our main reference point at the moment for a country going through the socio-economic situation, we're now going through as Japan. If you think about it, low growth, low birth rates, that combination of the economic and demographic pattern. And of course, in Japan, rather than being inflationary, it was deflationary. That was the problem, the Bank of Japan and the Japanese government had to deal with. But the difference is that Japan was going through that process in the 1990s and 2000s in a very different global context. One where, like everywhere else, Japan's trade with China was increasing and that kind of entire global environment was importing deflation into Japan. So we're in a situation where we're going through potentially something similar, but in a very different global environment and context. Indeed. And I think on that note, we end our discussion. Thank you for listening. Until after the holidays, this is our last podcast before our summer holiday. We will be back in the week of August 12th. Until then.